Wasn’t eCommerce supposed to be the death of cash? In Mexico, as it turns out, that hasn’t been the case.
With nearly 90 percent of consumer transactions still being paid using cash, eCommerce merchants like Amazon and Linio are coming up with creative ways to cater to a market where consumers continue to pick cash over cards.
Six months after Amazon’s launch in Mexico, the company began selling gift cards at convenience stores to tap into cash-loving consumers who would rather not pay with their credit or debit cards.
Meanwhile, Linio, the largest eCommerce company in Latin America now lets consumers shop online and then pickup and pay for products in cash at Oxxo stores, the largest c-store chain in Mexico. And Walmart also seems to have adopted a similar strategy. The retailer woos online shoppers without access to credit cards to pay for their purchases at physical store locations.
The payment strategy of these three retailers align with the findings of the new PYMNTS.com Global Cash Index™ Mexico Analysis. The report reveals that Mexico continues to use more cash than any other country in the Americas. And while the slow but constant growth of alternate forms of payment have contributed to a decline in cash’s growth, cash usage is still projected to grow by 3.1 percent between 2015 and 2020.
Here are some other key takeaways from the new PYMNTS.com Global Cash Index™ Mexico Analysis:
- As of 2015, cash usage in Mexico as a percent of its gross domestic product (GDP) stood at 26.7 percent.
- In the past 10 years, much of the reduction in cash usage in Mexico has come from a decline in over-the-counter (OTC) withdrawals, which decreased from $147.8 billion in 2006 to $132.2 billion in 2015. Meanwhile, use of ATMs for cash withdrawals spiked during the same period.
- Mobile payments are projected to make a splash in urban areas. The country has the third highest usage in Latin America.
The PYMNTS.com Global Cash Index™ Mexico Analysis also features an interview with Javier Vallaure, chief business development officer at Allpago, the largest payment processing company in Latin America. Vallaure said that while credit and debit cards are the most used payment methods for online transactions, international retailers are keeping cash payments front and center in their expansion strategies to tap into Mexican consumers, many of whom often do not have access to card-based payment methods.
And even though debit and credit cards are projected to further increase their share in Mexico in the coming years, Vallaure believes the smart move for merchants is not to move away from facilitating cash-based payments, but to offer an array of payment methods to maximize outreach.
To download the analysis, please click below…
About the Index
The PYMNTS.com Global Cash Index™, a Cardtronics collaboration, focuses on the use of cash for making payments and as a payment method that equally plays a role with cards, checks, direct debit and other methods of settling up between consumers and businesses. Unlike most reported estimates of cash, our proprietary data analysis focuses on the use of cash for making payments rather than hoarding.